Agentic AI can transform utility customer service: McKinsey report finds

According to a McKinsey report, utilities can cut customer service costs by 30-50% and boost satisfaction by up to 20% by adopting agentic AI for an end-to-end transformation of customer operations, moving beyond isolated pilots.

Utilities can reduce customer service costs by 30-50 per cent while improving customer satisfaction by up to 20 per cent through large-scale adoption of agentic artificial intelligence (AI), with the technology enabling an end-to-end transformation of customer operations rather than isolated AI pilots, according to a McKinsey report.

"The mandate is clear and urgent: reduce costs while improving customer satisfaction. Agentic AI makes both possible by rewiring customer operations end to end, not via AI pilots or isolated use cases," the report said, highlighting that utilities must redesign customer journeys and workflows around AI to achieve meaningful operational gains.

Tackling Declining Customer Satisfaction

McKinsey said utilities are moving beyond standalone AI tools and pilot projects towards comprehensive transformation of customer operations, allowing them to improve customer experience while lowering the cost of serving customers.

The report noted that customer satisfaction has declined in recent years even as customer engagement has increased, putting additional pressure on utility customer service operations. Based on McKinsey's 2025 survey of more than 10,000 utility customers, the share of respondents who said they were "very satisfied" fell by 11 percentage points since 2018, while the proportion reporting dissatisfaction rose to 29 per cent from 18 per cent. Around 70 per cent of customers also expressed concerns about affordability.

Key Areas for AI Deployment and Benefits

According to the report, organisations adopting AI at scale are redesigning customer journeys and operating workflows rather than simply automating individual tasks, resulting in significant operational improvements across customer-facing functions.

Billing and payments account for 40-50 per cent of customer calls, making them one of the largest opportunities for AI deployment, the report said. Utilities implementing agentic AI in billing-related processes have reduced such calls by 20-50 per cent by improving issue resolution and preventing recurring problems.

The report added that AI can also strengthen outage management through proactive customer communication, reducing outage-related calls by up to 50 per cent. AI-enabled field and meter service management can improve frontline productivity by 20-25 per cent.

In collections, utilities using AI have reduced arrears by 15-20 per cent while also lowering customer complaints, McKinsey said.

Phased Implementation for Maximum Gain

The report recommended a phased implementation strategy, with utilities first focusing on high-value customer journeys such as billing, payments, outage management and service requests before expanding AI adoption across broader operations. It added that utilities redesigning customer journeys, workflows and operating models around AI stand to gain the most from the transformation.

(ANI)

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